In an experiment 16.81 +/- 0.02 grams of hydrogen peroxide chemically decomposes into the products water and oxygen gas. The measured mass of oxygen gas produced in the reaction is 8.854 +/- 0.003 grams. Report the mass of water produced to the correct number of significant digits (Do not perform any calculation involving the estimates of uncertainties in the measurements.)

Yes, 7.96 g is correct and the correct number of s.f. BECAUSE,
16.81 - 8.854 = 7.956 g. The least sig number is 16.81 (two places to the right of the decimal) and when we subtract, we may have in the answer no more than two places to the right of the decimal. Thus, 7.956 rounds to 7.96 which has two places to the right of the decimal.